Minister of Trade, Budi Santoso, has positively responded to the recent reduction in U.S. import tariffs for Indonesian goods, saying the move presents a major investment opportunity as factories in neighboring countries with higher tariffs may consider relocating their production to Indonesia.

He emphasized that the trade ministry has identified 10 key export commodities − including footwear and textile products − whose production facilities could potentially be relocated to Indonesia.

“These commodities represent Indonesia’s top 10 exports to the United States. We’ve mapped out which factories in other countries that could shift their operations to Indonesia,” Budi told a hearing at the House of Representatives (DPR) on Wednesday, July 16, 2025.

According to the Indonesian Employers Association (Apindo), Indonesia's tariff competitiveness has now surpassed regional peers: Thailand (36 percent), Laos (40 percent), Malaysia (25 percent), and Vietnam (20 percent). Budi also highlighted that the removal of U.S. import duties on raw materials and capital goods − such as cotton, soybeans, corn, and crude oil − could strengthen domestic manufacturing resilience.

“This is a golden opportunity that can support our local industries,” Budi said.

Anne Patricia Sutanto, Apindo's Head of Trade Affairs, however, downplayed the immediate impact of the tariff exemption. She noted that most existing tariffs on U.S. goods are already low, ranging from 0 percent to 5 percent.

Still, Apindo is committed to evaluating the effects of both the removal of U.S. tariffs and the newly imposed 19 percent tariff by other trade partners on various industrial sectors.

“Tariff policies during the Trump era were highly volatile and politically driven, so we need to assess this carefully,” Anne said.

To help industries adapt with the new tariff, Apindo is preparing mitigation proposals, including pushing for greater exports to non-traditional markets and accelerating national deregulation agendas. She emphasized the need for vigilance as the government finalizes technical details of the new trade agreement with the U.S.

“Negotiations with the U.S. require high alert. That’s why one of our mitigation strategies is to diversify exports and fast-track regulatory reforms,” Anne said.